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GoPro Takes the Lead in Shift Out of China to Avoid Tariffs

(Bloomberg) -- GoPro Inc. will move most of its U.S.-bound camera production out of China by next summer, becoming one of the first brand-name electronics makers to take such action to minimize the impact of the escalating trade war.

“Today’s geopolitical business environment requires agility,” GoPro Chief Financial Officer Brian McGee said in a statement Monday. “We’re proactively addressing tariff concerns.” The company is still deciding where to put the manufacturing operation.

The trade war between the world’s two biggest economies has made more than $250 billion of goods from China more expensive for Americans, from component pieces to electric scooters, and U.S. President Donald Trump has threatened to place tariffs on all goods coming from China. Trump and China’s President Xi Jinping agreed in on Dec. 1 to hold off on increasing tariffs for 90 days. But the arrest of Huawei Technologies Co. CFO Meng Wanzhou at the behest of U.S. authorities has stoked renewed fears of a further escalation.

GoPro shares were down 1.3 percent, to $4.91 in New York. They have declined 35 percent so far this year.

“This is a sign that those in the technology supply chain aren’t confident we’ll get a clean resolution soon to the trade war,” said Joe Wittine, an analyst at Longbow Research.

The San Mateo, California-based company said it expects shifting U.S. production to come at a "relatively low cost" since the company owns its production equipment. Cameras headed for other countries will continue to be made in China, GoPro said. In the third quarter, more than 40 percent of revenue came from the Americas, while about 25 percent came from Asia and Pacific area countries.

China became the world’s factory as multinational companies took advantage of the lower production costs. Yet the tariffs are hurting already thin margins, causing companies to turn toward countries in Southeast Asia as an alternative base for firms relocating manufacturing away from China. About one-third of more than 430 companies in China are considering sourcing components or assembly outside of the country as a result of tariffs, according to a survey by AmCham China and AmCham Shanghai.

"GoPro could provide an early look of the post-"Make America Great" tech supply chain, where your gadget is made in Vietnam or Indonesia, instead of China," Wittine said.